Not only theoretically.

In it's entry on the East German Ministry for State Security Wikipedia reports that:

The Stasi infiltrated almost every aspect of GDR life. In the mid-1980s, a network of IMs began growing in both German states; by the time that East Germany collapsed in 1989, the Stasi employed 91,015 employees and 173,081 informants. About one out of every 63 East Germans collaborated with the Stasi. By at least one estimate, the Stasi maintained greater surveillance over its own people than any secret police force in history. The Stasi employed one full-time agent for every 166 East Germans. The ratios swelled when informers were factored in: counting part-time informers, the Stasi had one informer per 6.5 people.

Basically, numbers such as that suggest that in any gathering of more than six people the odds that one of the participants was an informer were enormous. At some point it would seem that people would have to be reporting on themselves just to keep the numbers up. And in this case the Panopticon most definitely wasn't benign. But although on the one hand it seems that it succeeded in establishing the sense of always being watched, on the other it seems to have done away with the "maybe" aspect. You really were being watched.

Go to: That's the best word you can find?, or
Go to: Ain't no need to hide, ain't no need to run.